Technology

Safaricom's profit hits Sh32 billion powered by M-Pesa, data growth

Safaricom made a record Sh31.9 billion profit after tax for the 12 months that ended in March, solidifying its position as the most profitable company in East and Central Africa.

The company has 23.3 million customers — over half of Kenya’s population — and earned an average of Sh87.4 million in profit each day or Sh3.6 million every hour.

M-Pesa, the phone-based money transfer service, was the biggest driver of the company’s phenomenal growth. The service has 13.9 million active customers served by 85,756 agents across the country. The mode of payment is accepted by 50,000 merchants in various sectors of the economy, from retail outlets to hotels and petrol stations.

Revenue from M-Pesa increased by 15 per cent from the previous financial year to hit a high of Sh32.6 billion — enough money to build the Thika superhighway and still leave change to spare.

“M-Pesa, now contributing 20 per cent of total revenue, continues to be a significant factor in our growth,” said chief execuitve Bob Collymore during the announcement of the results in Nairobi yesterday. The earnings represent a 38 per cent jump from Sh23 billion that the company made over a similar period the previous year.

The company also said it had launched an alternative to M-Shwari through a partnership with KCB, which released its financial results Thursday.

KCB is now the biggest bank, emerging as the most profitable bank in Kenya with Sh4.3 billion in first quarter earnings.
Safaricom spent over Sh7 billion to move M-Pesa servers from Germany to Kenya last month. The money transfer service is expected to drive Safaricom’s Cash-lite campaign through its Lipa na M-Pesa services.

Its revenue from SMSs also increased significantly to reach Sh15.6 billion, a growth of 15 per cent from the 2013-2014 financial year.

The company also recorded an increase in earnings from data and other revenue streams not based on calls. Its revenues from phone calls alone rose to Sh87.4 billion, accounting for about half of the company’s revenues.

Mr Collymore said the company’s focus on providing quality services to its growing number of customers helped it to realise the growth.

“We continue to strive to deliver the best service to our customers and for that we have been rewarded with strong commercial and financial performance.”

The company’s shareholders will earn improved dividend of 64 cents a share, a 36 per cent increase from last year. The company will pay out Sh26 billion in dividends.

The company’s share price had risen to an all-time high of Sh17.90 apiece just before yesterday’s announcement.
Capital expenditure for the last year stood at Sh33 billion.

Among the projects that the company spent money on was laying of over 2,000 kilometres of fibre optic cables, upgrading of its networks and creating new M-Pesa platforms.

However, Mr Collymore said the firm would focus on cost control measures this year.
And in what could signal its formal entry into the media market, Safaricom said it plans to launch a home broadband package to be unveiled today.

DIGITAL FREE TO AIR

Besides offering digital free-to-air TV channels the TV set-top boxes starting from today, it will also provide 3G and 4G network connection to homes through Wi-Fi.

Should this happen, then the company will become a formidable competitor to local broadcasting stations as it will be signing partnerships with both local and international television content providers.

As such, it will become the first beneficiary of TV digital migration.

It has announced its commercial rollout of 4G network which is now available in Nairobi and Mombasa before they are extended to 13 other towns.

“This will provide superfast home broadband and mobile data offerings as we meet our commitment to improving our network quality, capacity and coverage for our customers,” said Mr Collymore.

And in what was interpreted as a move to moderate investors’ expectations for next financial year, he said Safaricom expects a single digit growth in net income for 2016 with a projected profit of between Sh32 billion and Sh34 billion.
The huge profit announcement is expected act as catalysts for those calling for the operator to be declared a dominant player in the market.

There has been a push for the company to be split into three independent units.
Its competitor, Airtel Kenya, with the backing of the Cabinet Secretary of Information Communication Technology, Dr Fred Matiang’i, has been at the forefront pushing for Safaricom to be split.

Mr Collymore said the firm’s strategy will be driven by three pillars; Putting its customers first, delivering relevant products and ensuring excellence in operations.

“For another consecutive year, we have delivered robust results and ensured value for our shareholders supported by growth across all our revenue streams,” said Mr Collymore.

His term as chief executive has been extended for two more years. -NATION